McLane Foodservice, Inc. v. Table Rock Restaurants, L.L.C.
2013 U.S. App. LEXIS 23116
| 5th Cir. | 2013Background
- McLane sued Table Rock and Wederquist for debts owed in 2010 totaling $447,465.53.
- Wederquist is a 40% owner and treasurer of Table Rock; Table Rock formed in 2007 and ceased business in 2010.
- Wederquist executed a personal guaranty in 1997 securing debts of Border Patrol to PFS; PFS later became Ameriserve.
- The Guaranty states it unconditionally guarantees payment of indebtedness to Creditor (PFS and affiliates) now or hereafter existing.
- The district court found McLane not an affiliate of PFS and thus not within the Guaranty’s scope; judgment entered for McLane against Table Rock only.
- On appeal, the Fifth Circuit held the Guaranty only secures credit extended by PFS and its affiliates, and McLane is not such an affiliate.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Does the Guaranty secure credit extended by PFS and its affiliates? | McLane (as successor/assign) contends benefit from Guaranty extends to debts of Table Rock. | Guaranty covers only credit extended by PFS and its affiliates; McLane is not an affiliate. | No; Guaranty does not secure Table Rock debts. |
| Is McLane entitled to enforce the Guaranty against Wederquist under Section 10? | Section 10 inures to the benefit of Creditor and its successors, transferees, and assigns. | Section 10 does not make McLane an enforceable beneficiary against Wederquist forTable Rock debts. | No; Section 10 does not create liability on Wederquist. |
Key Cases Cited
- Coker v. Coker, 650 S.W.2d 391 (Tex. 1983) (guaranties construed strictly in favor of guarantor; give effect to all provisions)
- Webster v. J.M. Davidson, 128 S.W.3d 223 (Tex. 2003) (contract interpretation; harmonize entire contract)
- Haggard v. Bank of Ozarks, Inc., 668 F.3d 196 (5th Cir. 2012) (guaranty is construed in guarantor's favor)
- Lopez v. Munos, Hockema & Reed, L.L.P., 22 S.W.3d 857 (Tex. 2000) (contract interpretation principles)
- Valence Operating Co. v. Dorsett, 164 S.W.3d 656 (Tex. 2005) (harmonize entire writing; avoid meaningless provisions)
- J.M. Davidson, Inc. v. Webster, 128 S.W.3d 223 (Tex. 2003) (contract interpretation; determine parties' intent)